Mercedes' small cars, the A-Class and B-Class, have not been the runaway success that the German automaker had hoped they would be, partially due to high costs of production that drove retail prices up above their competitors. That's why Mercedes-Benz had been looking at forming a partnership with a rival automaker in order to reduce costs and produce more competitively-priced entry-level models. But after discussions were held with both BMW and Fiat, Mercedes has opted to go it alone.

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[Source: Inside Line]


According to CEO Dieter Zetsche, partnering with another automaker for the next-generation A and B would inhibit M-B's own strategy for the small cars. Benz's own program for the A and B classes would be based off a common platform, smaller than that of the C-Class, with front-wheel-drive and "high-mounted transverse-sited engines". Industry analysts suggest the next A-Class could be offered only as a three-door model, with the potential for a convertible version to follow. The B-Class variant, meanwhile, is expected to be bigger than the current model, about the size of a Volkswagen Touran minivan. Rumors are circulating that a third model is in the works, as well: a compact SUV placed below the upcoming GLK in the Mercedes line-up to battle the likes of the Volkswagen Tiguan and BMW X1. Since it won't be building the A and B without help from other automakers, Mercedes is back to square one when it comes to cost-cutting measures, and is reportedly considering building a lower-cost assembly plant in eastern Europe to mitigate production costs. Unfortunately, building new plants isn't that cheap, either.